- Bitcoin hits intra-day high above $30,000
- TerraUSD collapse shakes crypto market
- Analysts say impact on traditional markets limited
HONG KONG/LONDON/NEW YORK, May 13 (Reuters) – Cryptocurrencies steadied on Friday, with bitcoin recovering from a 16-month low after a volatile week dominated by the collapse in value of TerraUSD, a so-called stablecoin.
Crypto assets have been swept up in broad selling of risky investments on worries about high inflation and rising interest rates, but have started showing signs of settling.
Although the near-term trajectory of the crypto market is challenging to predict, the worst may be over, said Juan Perez, director of trading at Monex USA in Washington.
“Perhaps now that all the obstacles to global growth along with monetary tightening are clear, perhaps we will start seeing swings upwards,” he said.
Bitcoin , the largest cryptocurrency by market value, last rose 4.85% to $29,925, rebounding from a December 2020-low of $25,400 which it hit on Thursday.
Although it hit a high of just under $31,000 on Friday, bitcoin remains far below week-earlier levels of around $40,000 and unless there is a huge weekend rally it is on track for a record seventh consecutive weekly loss.
Stifel chief equity strategist Barry Bannister said bitcoin still has further downside to about $15,000.
“Bitcoin is also GDP-sensitive, because bitcoin falls when the PMI Manufacturing index drops, as we expect (into the third quarter of 2022), indicating that a last, capitulatory bitcoin drop may be still ahead,” he added.
Ether, the second largest cryptocurrency in terms of market cap, also gained, climbing 6.48% to $2,051.
Tether, the biggest stablecoin whose developers say is backed by dollar assets, was back at $1, after falling to 95 cents on Thursday. read more
TerraUSD, however, the stablecoin that is also supposedly pegged to the dollar, continued to languish, at 14 cents, according to data tracker CoinGecko. It has remained de-pegged from the U.S. currency since May 9.
The crypto sector’s overall market capitalisation rose 6.6% to $1.35 trillion on Friday, CoinGecko data showed.
Broader financial markets have so far seen little knock-on effect from the cryptocurrency crash. Ratings agency Fitch said in a note on Thursday that weak links to regulated financial markets will limit the potential of crypto market volatility to cause wider financial instability.
“Crypto is still tiny and crypto integration within broader financial markets is still infinitesimally small,” said James Malcolm, head of FX strategy at UBS.
Crypto-related stocks have taken a pounding with the meltdown in the market, but on Friday, broker Coinbase (COIN.O) rose 16% to $67.87, although it is still down 28% on the week.
Selling has roughly halved the global market value of cryptocurrencies since November, but the drawdown turned to panic in recent sessions with a squeeze on stablecoins.
Stablecoins are tokens pegged to the value of traditional assets, often the U.S. dollar, and are the main medium for moving money between cryptocurrencies or for converting balances to fiat cash. read more
Cryptocurrency markets were rocked this week by the collapse of TerraUSD (UST), which broke its 1:1 peg to the dollar.
The coin’s complex stability mechanism, which involved balancing with a free-floating cryptocurrency called Luna, stopped working when Luna plunged close to zero. read more
“For these types of stablecoins, the market needs to trust that the issuer holds sufficient liquid assets they would be able to sell in times of market stress,” analysts at Morgan Stanley said in a research note.
The operating company of another stablecoin called Tether said it has the necessary assets in Treasuries, cash, corporate bonds and other money-market products.
But stablecoins are likely to face further tests if traders keep selling, and analysts are concerned that stress could spill over into money markets if there is more and more liquidation.
Fitch said cryptocurrencies and digital finance could face “significant negative repercussions” if investors lose confidence in stablecoins, as many regulated financial entities have increased their exposure to the sector in recent months.
Reporting by Tom Westbrook in Singapore, Alun John in Hong Kong, Elizabeth Howcroft in London, and Gertrude Chavez-Dreyfuss in New York; Additional reporting by Hannah Lang in Washington; Editing by Bradley Perrett, Emelia Sithole-Matarise and Bernard Orr
Our Standards: The Thomson Reuters Trust Principles.
Veteran philanthropist tells World Economic Forum civilisation ‘may not survive’ what is coming
Russia’s invasion of Ukraine threatens to be the “beginning of the third world war” that could spell the end of civilisation, the veteran philanthropist and former financier George Soros has warned.
In a ferocious attack on Vladimir Putin and China’s Xi Jinping at the World Economic Forum in Davos, Soros warned that autocratic regimes were in the ascendant and the global economy was heading for a depression.
Soros, who has become a hate figure for the hard right in the US, also heavily criticised the former German chancellor Angela Merkel for cosying up to Moscow and Beijing.
With the mood in Davos already downbeat due to the war in Ukraine, Soros ramped up the gloomy rhetoric to new heights.
“The invasion may have been the beginning of the third world war and our civilisation may not survive it,” he said.
“The invasion of Ukraine didn’t come out of the blue. The world has been increasingly engaged in a struggle between two systems of governance that are diametrically opposed to each other: open society and closed society.”
The 91-year-old former hedge fund owner said the tide had started to turn against open societies in the aftermath of the 9/11 terrorist attacks on the US in 2001. “Repressive regimes are now in the ascendant and open societies are under siege. Today China and Russia present the greatest threat to open society.”
Soros, who led the speculative financial attack that drove the pound out of the European exchange rate mechanism 30 years ago, said Europe had responded well to the crisis triggered by Russia’s invasion.
“It will take a long time to work out the details, but Europe seems to be moving in the right direction. It has responded to the invasion of Ukraine with greater speed, unity and vigour than ever before in its history.”
He added: “But Europe’s dependence on Russian fossil fuels remains excessive, due largely to the mercantilist policies pursued by former chancellor Angela Merkel. She had made special deals with Russia for the supply of gas and made China Germany’s largest export market. That made Germany the best performing economy in Europe but now there is a heavy price to pay. Germany’s economy needs to be reoriented. And that will take a long time.”
Soros said Putin had won Xi’s agreement to the Russian invasion at the opening of the Beijing Winter Olympics in early February. But he insisted the Chinese leader was not as strong as he believed.
“Xi harbours a guilty secret. He never told the Chinese people that they had been inoculated with a vaccine that was designed for the original Wuhan variant and offers very little protection against new variants.”
Soros said Xi was unable to “come clean” because he was at a delicate moment in his career. “His second term in office expires in the fall of 2022 and he wants to be appointed to an unprecedented third term, eventually making him ruler for life.”
China’s lockdowns to combat Covid-19 had pushed the economy into freefall but Xi was unable to admit he had made a mistake, he said.
“Coming on top of the real estate crisis the damage will be so great that it will affect the global economy. With the disruption of supply chains, global inflation is liable to turn into global depression.”
Contrary to general expectations, Xi may not get his coveted third term because of the mistakes he had made, Soros predicted.
“While the war rages, the fight against climate change has to take second place. Yet the experts tell us that we have already fallen far behind, and climate change is on the verge of becoming irreversible. That could be the end of our civilisation.
“Therefore, we must mobilise all our resources to bring the war to an early end. The best and perhaps only way to preserve our civilisation is to defeat Putin as soon as possible. That’s the bottom line.”
WHO Director-General Tedros Adhanom Ghebreyesus was reappointed to a second five-year term on Tuesday by the UN health agency’s member countries.
No other candidate challenged Tedros for the post amid the ongoing difficulties of responding to the devastating coronavirus pandemic.
“This is overwhelming,” Tedros said, after another World Health Organisation official asked everyone in the room to stand and applaud him.
Fighting back tears, Tedros described himself as “a child of war” after signing the contract for his extension. He said that after witnessing his younger brother’s death at an early age, it was “luck (that) brought me all the way here.”
Tedros, a former government minister from Ethiopia, has directed WHO throughout its management of the global response to COVID-19 and withstood occasionally withering criticism over its multiple missteps.
He is the first African to lead the agency and the only director-general not qualified as a medical doctor.
He is also the first WHO leader not to be supported by their home country; Ethiopia has previously accused Tedros of “ misconduct ” after his sharp criticism of the war and humanitarian crisis there and raised concerns about his leadership on Tuesday.
Under Tedros, the U.N. health agency failed to call out countries including China for blunders that WHO officials grumbled about privately, advised against mask-wearing for months, and said initially that the coronavirus wasn’t likely to mutate rapidly.
Scientists drafted by WHO to investigate the coronavirus’ origins in China said the critical probe was “ stalled ” last year, after issuing a report that even Tedros acknowledged had prematurely ruled out the possibility of a laboratory leak.
“There have been some mishaps, but Tedros has also been a steady voice throughout the pandemic, advocating for an equitable response,” said Javier Guzman, director of global health policy at the Center for Global Development in Washington.
He said despite reservations about Tedros’ leadership, some countries weren’t willing to push for change.
“We are in the middle of the pandemic and there is some pressure for consistent leadership to take us through this difficult moment,” Guzman said.
Tedros has frequently railed against rich countries for hoarding the world’s limited supply of vaccines and insisted that pharmaceuticals aren’t doing enough to make their medicines available to the poor.
Amid the near-universal focus on Ukraine after the Russian invasion, Tedros slammed the global community for not doing enough to solve crises elsewhere, including Yemen, Syria and Afghanistan, arguing that it was possibly because those suffering weren’t white.
Still, critics say Tedros has failed on some fundamental issues, like holding staff accountable after allegations that dozens of outbreak workers managed by WHO sexually abused young women in Congo during an Ebola outbreak that began in 2018, in one of the biggest sex scandals in UN history.
None of the senior WHO managers alerted to the abuse allegations and who did little to stop the exploitation, have been fired.
In January, The Associated Press reported that staffers in WHO’s Western Pacific office filed an internal complaint accusing regional director Dr. Takeshi Kasai of abusive, racist and other misconduct, undermining efforts to stem the spread of COVID-19. In response, Tedros said an investigation into the allegations had been launched and promised to act “with urgency.”
But last week, several WHO staffers wrote to the agency’s Executive Board complaining that Kasai “has been able to continue his unethical, abusive and racist conduct without any form of restriction.” In an email to staff, Kasai disputed the charges.
Public health expert Guzman said the apparent culture of impunity at WHO was problematic.
“We do need to see a stronger (WHO) director-general going forward, where misconduct is not tolerated,” he said, calling for extensive reforms to make the agency accountable.
As Tedros begins his second term, some experts have also raised concerns that WHO isn’t fulfilling its primary role as a technical agency providing science-based guidance to countries.
Dr. David Tomlinson, a cardiologist who has campaigned for better protective equipment for health workers in Britain’s health system, says he has been appalled by WHO advice, most notably their reluctance to acknowledge that COVID-19 is widely spread in the air.
In July 2020, more than 230 scientists published a paper appealing to WHO to recognise the coronavirus was airborne; that later prompted the organisation to alter some of its recommendations.
Tomlinson and others say Tedros should ensure WHO’s top priority during future health emergencies is evaluating the science.
“They have perpetuated untruths that have ultimately led to the deaths of millions of people,” he said, citing the estimated 15 million people who have died during the pandemic.
“We need an agency that’s unafraid to tell the truth, but that’s unfortunately not what we have.”
The news is just the latest in a series of major announcements from the auto company
Hyundai Motor Group has confirmed a major $5 billion investment to support its work in robotics, AI technologies, advanced air mobility and autonomous driving capability.
The group, which sells cars under the Hyundai, Kia and Genesis brands, has made no secret of its bold intentions to become a dominant player in the world of mobility solutions, and the news is just the latest in a series of major announcements from the Korean auto giant.
Only last week, the company revealed it would spend $5.54 billion to build its first electric vehicle and battery manufacturing facilities in the United States at a site just outside Savannah in Bryan County, Georgia. It is scheduled to open in early 2025 and is slated to have an annual production capacity of 300,000 vehicles.
The Georgia plans were made public just days after Hyundai confirmed it would be building a huge new production hub for electric, autonomous Purpose-Built Vehicles within Kia’s existing Hwaseong manufacturing site in Gyeonggi Province in South Korea. Construction of that facility is set to start in the first half of next year, with commercial production planned to get underway in the second half of 2025.
The company provided a few clues as to where the latest investment is likely to go in a statement released to accompany the news.
Hyundai sees robotics as playing an essential role in smart mobility solutions and will invest in this area. Having acquired robotics developer Boston Dynamics in June 2021 in a deal valued at $1.1 billion, Hyundai says it’s committed to its growth and will expand its manufacturing capability and enhance its product range.
There will also be further investment in Boston self-driving company, Motional. Earlier this month, Motional confirmed that the autonomous Ioniq 5 robotaxi it is developing alongside Hyundai will be rolled out on Las Vegas roads as early as next year. The group says it is ready to make more funding available to accelerate the development of self-driving tech.
Additional investment in advanced air mobility (AAM) is probable, too. The group is developing technologies and infrastructure in advanced air mobility (AAM) and launched Washington D.C.-based Supernal last year to strengthen its capability in this sphere.
Supernal is working to integrate AAM into existing transit networks, with the ultimate vision for passengers to use a single app – like current rideshare platforms – to plan their journey. This could include taking a car or rail from home to an AAM “vertiport” – like the one Supernal helped create in Coventry in the English Midlands earlier this year – riding an eVTOL across town, and then using an e-scooter for the last mile.
The group also said it would invest further in artificial intelligence technologies.
Euisun Chung, executive chair of Hyundai Motor Group, announced the investment after meeting President Joe Biden in Seoul.
“The group will strengthen our partnership with US public and private entities to offer innovative products and mobility solutions to our valued customers in the U.S., while supporting global carbon neutrality efforts.”
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